Thank you and my thanks to the Navy League, which has been, for more than a century, a firm and at times fierce advocate for sea power and American engagement abroad.

�?It is a pleasure to be here this afternoon.�? While I have spoken to the military service organizations for the Army, Air Force, and Marine Corps, this is my first opportunity to attend your annual gathering.�? So, to start on the right foot, I should note that, for the first time in history, the Pentagon has now had officers from the sea services in back-to-back terms in the top two positions in America’s military – a Marine chairman of the joint chiefs of staff and Navy vice chairman, followed by a Navy chairman and Marine vice chairman.�? I suspect many of you think we finally got�?it right.

�?The topic of this year’s exposition is:�? “Responding Globally:�? Engaged at Sea and Ashore.”�? Considering our military’s unprecedented level of global engagement – especially the sea services – I can't think of a better subject.

�?The pattern of engagement is reflected in a range of activities around the world that would no doubt leave Alfred Thayer Mahan spinning in his grave:�? building partnership capacity through the Africa Partnership Station in the Gulf of Guinea; training with friends and allies to secure vital shipping lanes in Southeast Asia; digging wells and building schools in Djibouti; leading multinational efforts to counter the scourge of piracy around the Horn of Africa; dispatching hospital ships to treat the poor and the destitute; helping with crises like the oil spill along the Gulf Coast; and responding to natural disasters, most recently in Haiti – efforts that demonstrate our servicemembers’ incredible compassion and decency.

�?And then, of course,�?there are the wars.�? With roughly 25 ships – and more than 20,000 sailors – in the CENTCOM area of operations, there is no doubt that this is a Navy at war.�? Every time I visit Iraq or Afghanistan, I am struck by the number of sailors on the ground – one of the great unappreciated stories of the last number of years.�? Tens of thousands of sailors have been to theater – including officers commanding provincial reconstruction teams, finance clerks, riverine crews, engineers, the SEALs and the Corpsmen, and our “devil docs.”�? These men and women are vital to the mission and helping to ease the strain on�?the ground forces – and doing so without fail and without complaint.�?

�?And then, of course, there is the role of the Marine Corps, whose impact in the wars has been a game-changer:�? first in Anbar province, key to the turnaround in Iraq, and now in southern Afghanistan, the center of gravity in that war.�? In March, I had�?the chance to meet with Marines at the tip of the spear in a town called Now Zad – a place that had been, for nearly four years, a ghost-town under the jackboot of the Taliban.�? And then came a battalion of Marines, who, after months of hard work and sacrifice, have slowly brought the town back to life – creating a model for operations elsewhere.�?

For years now, the Corps has been acting as essentially a second land army.�? As General Conway has noted, there are young, battle-hardened Marines with multiple combat tours who have spent little time inside of a ship, much less practicing hitting a beach.�? Their critical work well inland will be necessary for the foreseeable future.

Many of the tasks and roles I’ve just mentioned would have been unthinkable as recently as a decade ago, and are with our sea services to stay.�? But we must always be mindful of why America built and has maintained a Navy, Marine Corps, and Coast Guard.�? Indeed, it was an Army general, Ulysses Grant, who said that “[m]oney expended in a fine navy, not only adds to our security and tends to prevent war in the future, but is very material aid to our commerce with foreign nations in the meantime.”�? And in fact, this country learned early on, after years of being bullied and blackmailed on the high seas, that it must be able to protect trade routes, project power, deter potential adversaries, and, if necessary, strike them on the oceans, in their ports, or on their shores.�? We cannot allow these core capabilities and skill sets to atrophy through distraction or neglect.

This is even more important considering that, with America’s ground forces dedicated to the campaigns in the Middle East and Central Asia, the weight of America’s deterrent and strategic military strength has shifted to our air and naval forces.�? So in the next few minutes I’d like to offer some perspective on the challenges facing America’s sea services as they strive to field and fund the capabilities our nation will need�?in the decades ahead – focusing on three central questions:

• First, what kind of qualities should the maritime services encourage in a new generation of leaders?
• Second, what new capabilities will our Navy-Marine Corps team need, and which ones will potentially be made obsolete?
• And third, how can we be sure that our procurement plans are cost-effective, efficient, and realistic?

As a starting point, given the complex security challenges America faces around the globe, the future of our maritime services will ultimately depend less on the quality of their hardware than on the quality of their leaders.�? I addressed this question to midshipmen at the Naval Academy a month ago by citing some of the towering figures from our sea services.�? Leaders like:

• Lieutenant General Victor Krulak, the visionary behind the Higgins boat who later contributed greatly to our understanding of counterinsurgency in Vietnam;
• Admiral Chester Nimitz, who as a young officer helped develop the circular formation for carrier escorts, used to great effect in World War II and for decades afterwards;
• Admiral Hyman Rickover, whose genius and persistence overcame the conventional wisdom that nuclear reactors were too bulky and dangerous to put on submarines; and
• Finally, Roy Boehm, who after World War II designed and led a special new commando unit that became the Navy SEALs.�? Boehm’s legacy is at work every night, tracking down our nation’s most lethal enemies in Afghanistan and elsewhere around the world.

The reason I wanted to talk to the midshipmen about these leaders – and why I am citing them today – is not that they were always right.�? Nor that they should be emulated in every way – to put it mildly.�? What is compelling about each of these leaders is that they had the vision and the insight to see that the world and technology were changing, they understood the implications of these shifts, and then pressed ahead in the face of often fierce institutional resistance.�?

�?The qualities these legends embody have been important and decisive throughout the history of warfare.�? But I would contend they are more necessary than ever in the first decades of this century, given the pace of technological changes, and the agile and adaptive nature of our likely and lethal adversaries – from modern militaries using asymmetric tactics to terrorist groups with advanced weapons. �?Our officers will lead an American military that must have the maximum possilbe�?flexibility to deal with the widest possible range of scenarios and conflicts.�?

�?Second, in order to be successful, the sea services must have the right make-up and capabilities.�? Surveying our current force, it is useful to start with some perspective – especially since the Navy, of all the services, has been the most consistently concerned about its size as measured by the total number of ships in the fleet.

�?It is important to remember that, as much as the U.S. battle fleet has shrunk since the end of the Cold War, the rest of the world’s navies have shrunk even more.�? So, in relative terms, the U.S. Navy is as strong as it has ever been.

�?In assessing risks and requirements even in light of an expanding array of global missions and responsibilities – everything from shows of presence to humanitarian relief – some context is useful:

• The U.S. operates 11 large carriers, all nuclear powered.�? In terms of size and striking power, no other country has even one comparable ship.
• The U.S. Navy has 10 large-deck amphibious ships that can operate as sea bases for helicopters and vertical-takeoff jets.�? No other navy has more than three, and all of those navies belong to�?pur allies or friends.�? Our Navy can carry twice as many aircraft at sea as all the rest of the world combined.
• The U.S. has 57 nuclear-powered attack and cruise missile submarines – again, more than the rest of the world combined.
• Seventy-nine Aegis-equipped combatants carry roughly 8,000 vertical-launch missile cells.�? In terms of total missile firepower, the U.S. arguably outmatches the next 20 largest navies.
• All told, the displacement of the U.S. battle fleet – a proxy for overall fleet capabilities – exceeds, by one recent estimate, at least the next 13 navies combined, of which 11 are our allies or partners.
• And, at 202,000 strong, the Marine Corps is the largest military force of its kind in the world and�?exceeds the size of most world armies.

Still, even as the United States stands unsurpassed on, above, and below the high seas, we have to prepare for the future.�? As in previous eras, new centers of power – with new wealth, military strength, and ambitions on the world stage – are altering the strategic landscape.�? If history shows anything, it is that we cannot predict or guarantee the course of a nation decades from now – the time it takes to develop and build the next generation of ships, a process that has been likened to building a medieval cathedral:�? brick by brick, window by window – over decades.

�?Our Navy has to be designed for new challenges, new technologies, and new missions – because another one of history’s hard lessons is that, when it comes to military capabilities, those who fail to adapt often fail to survive.�? In World War II, both the American and British navies were surprised by the speed with which naval airpower made battleships obsolete.�? Because of two decades of testing and operations, however, both were well prepared to shift to carrier operations.�? We have to consider whether a similar revolution at sea is underway today.

�?Potential adversaries are well-aware of our overwhelming conventional advantage – which is why, despite significant naval modernization programs underway in some countries, no one intends to bankrupt themselves by challenging the us to a shipbuilding competition akin to the Dreadnought race�?before World War I.�?

�?Instead, potential adversaries are investing in weapons designed to neutralize U.S. advantages – to deny our military freedom of action while potentially threatening America’s primary means of projecting power:�? our bases, sea and air assets, and the networks that support them.

�?We know other nations are working on asymmetric ways to thwart the reach and striking power of the U.S. battle fleet.�? At the low end, Hezbollah, a non-state actor, used anti-ship missiles against the�?Israeli navy in 2006.�? And Iran is combining ballistic and cruise missiles, anti-ship missiles, mines, and swarming speedboats in order to challenge our naval power in that region.�?

�?At the higher end of the access-denial spectrum, the virtual monopoly the U.S. has enjoyed with precision guided weapons is eroding – especially with long-range, accurate anti-ship cruise and ballistic missiles that can potentially strike from over the horizon.�? This is a particular concern with aircraft carriers and other large, multi-billion-dollar blue-water surface combatants, where, for example, a Ford-class carrier plus its full complement of the latest aircraft would represent potentially a�?$15 to $20 billion�?set of hardware at risk.�? The U.S. will also face increasingly sophisticated underwater combat systems – including numbers of stealthy subs – all of which could end the operational sanctuary our Navy has enjoyed in the Western Pacific for the better part of six decades.

�?One part of the way ahead is through more innovative strategies and joint approaches.�? The agreement by the Navy and the�?Air Force to work together on an Air-Sea Battle concept is an encouraging development, which has the potential to do for America’s military deterrent power at the beginning of the 21^st century what Air-Land Battle did near the end of the 20^th.�?

�?But we must also rethink what and how we buy – to shift investments towards systems that provide the ability to see and strike deep along the full spectrum of conflict.�? This means, among other things:

• Extending the range at which U.S. naval forces can fight, refuel, and strike, with more resources devoted to long-range unmanned aircraft and intelligence, surveillance, and reconnaissance capabilities.
• New sea-based missile defenses;
• A submarine force with expanded roles that is prepared to conduct more missions deep inside an enemy’s battle network.�? We will also have to increase submarine strike capability and look at smaller and unmanned underwater platforms.

These changes are occurring even as the Navy is called upon to do more missions that fall on the low end of the conflict spectrum – a requirement that will not go away, as the new naval operational concept reflects. �?Whether the mission is counterinsurgency, piracy, or security assistance, among others, new missions have required new ways of thinking about the portfolio of weapons we buy.�? In particular, the Navy will need numbers, speed, and the ability to operate in shallow water, especially as the nature of war in the 21^st century pushes us toward smaller, more diffuse weapons and units that increasingly rely on a series of networks to wage war.�? As we learned last year, you don’t necessarily need a billion-dollar guided missile destroyer to chase down and deal with a bunch of teenage pirates wielding AK-47s and RPGs.

�?The Navy has responded with investments in more special warfare capabilities, small patrol coastal vessels, a riverine squadron, and joint high-speed vessels.�? Last year’s budget accelerated the buy of the Littoral Combat Ship, which, despite its development problems, is a versatile ship that can be produced in quantity and go places that are either too shallow or too�?risky for the Navy’s big, blue-water surface combatants.�? The new approach to LCS procurement and competition should provide an affordable, scalable, and sustainable path to producing the quantity of ships we need.

�?There has been some talk that the rebalancing effort of the last couple of years – where resources and institutional support have shifted towards what is needed in the current conflicts and other irregular scenarios – has skewed priorities too far away from high-tech conventional capabilities.�? In reality, in this fiscal year the Department of Defense�?requested nearly $190 billion for total procurement, research, and development – an almost 90 percent increase over the last decade.�? At most, 10 percent of that $190 billion is dedicated exclusively to equipment optimized for counterinsurgency, security assistance, humanitarian operations, or other so-called low-end capabilities.�? In these last two budget cycles, I have directed a needed and noticeable shift – but hardly a dramatic one, especially in light of the significant naval overmatch that I described earlier.

�?These issues invariably bring up debates over so-called “gaps” between stated requirements and current platforms – be they ships, aircraft, or anything else.�? More often than not, the solution offered is either more of what we already have or modernized versions of preexisting capabilities.�? This approach ignores the fact that we face diverse adversaries with finite resources that consequently force them to come at the U.S. in unconventional and innovative ways.�? The more relevant gap we risk creating is one between capabilities we are pursuing and those that are actually needed in the real world of tomorrow.

�?Considering that, the Department must continually adjust its future plans as the strategic environment evolves.�? Two major examples come to mind.

�?First, what kind of new platform is needed to get large numbers of troops from ship to shore under fire – in other words, the capability provided by the Expeditionary Fighting Vehicle.�? No doubt, it was a real strategic asset during the first Gulf War to have a flotilla of Marines waiting off Kuwait City – forcing Saddam’s army to keep one eye on the Saudi border, and one eye on the coast.�? But we have to take a hard look at where it would be necessary or sensible to launch another major amphibious landing again – especially as advances in anti-ship systems keep pushing the potential launch point further from shore.�? On a more basic level, in the 21^st century, what kind of amphibious capability do we really need to deal with the most likely scenarios, and then how much?

�?Second – aircraft carriers.�? Our current plan is to have eleven carrier strike groups through 2040 and it's in the budget.�? And to be sure, the need to project power across the oceans will never go away.�? But, consider the massive over-match the U.S. already enjoys.�? Consider, too, the growing anti-ship capabilities of adversaries.�? Do we really need eleven carrier strike groups for another 30 years when no other country has more than one?�? Any future plans must address these realities.

�?And that bring me to the third and final�?issue:�? the budget.�? I have in the past warned about our nation’s tendency to disarm in the wake of major wars.�? That remains a concern.�? But, as has always been the case, defense budget expectations over time, not to mention any country’s strategic strength, are intrinsically linked to the overall financial and fiscal health of the nation.

�?And in that respect, we have to accept some hard realities.�? American taxpayers and the Congress are rightfully worried about the deficit.�? At the same time, the Department of Defense’s track record as a steward of taxpayer dollars leaves much to be desired.�?

Now, I know as well as anyone�?that part of the problem lies outside the Defense Department – and it's been this way for a long time.�? One of my favorite stories is about Henry Knox, the first secretary of war.�? He was charged with building the first American fleet.�? And, to get the necessary support from the Congress, Knox eventually ended up with six frigates being built in six different shipyards in six different states. �?Some things never change

�?In this year’s budget submission, the Department has asked to end funding for an extra engine for the Joint Strike Fighter as well as to cease production of the C-17 cargo aircraft – two decisions supported by the services and by�?reams of analysis.�? As we speak, a fight is on to keep the Congress from putting the extra engine and more C-17s back into the budget – at an unnecessary potential cost to the taxpayers of billions of dollars over the next few years.�? The issues surrounding political will and the Defense budget are ones I will discuss in more detail at the Eisenhower Library�?this coming�?Saturday.

�?None of that, however, absolves the Pentagon and the services from responsibility with regard to procurement.�? These issues are especially acute when it comes to big-ticket items whose costs skyrocket far beyond initial estimates.�? Current submarines and amphibious ships are three times as expensive as their equivalents during the 1980s – and�?this in the context of an overall shipbuilding and conversion budget that is 20 percent less.�? Just a few years ago, the Congressional Budget Office projected that meeting the Navy’s shipbuilding plan would cost more than $20 billion�?a year – double the shipbuilding budget of recent years, and a projection that was underfunded by some 30 percent.�? It is reasonable to wonder whether the nation is getting a commensurate increase in capabilities in exchange for these spiraling costs.

The Navy’s DDG-1000 is a case in point.�? By the time the Navy leadership curtailed the program, the price of each ship had more than doubled and the projected fleet had dwindled from 32 to seven.�? The programmed buy now�?is three.

Or consider plans for a new ballistic missile submarine, the SSBN(X).�? Right now, the Department proposes spending $6 billion in research and development over the next few years – for a projected buy of twelve subs at $7 billion apiece.�? Current requirements call for a submarine with the size and payload of a boomer – and the stealth of an attack sub.�? In a congressional hearing earlier this year, I pointed out that in the latter part of this decade the new ballistic missile submarine alone would begin to eat up the lion’s share of the Navy’s shipbuilding resources.

To be sure, the most recent 30-year shipbuilding plan is a step in the right direction.�? And Secretary Mabus and Admiral Roughead have worked hard to create reasonable budgets and reset the service “in stride” to reduce operational disruptions.�? At the same time, the Navy’s innovative energy security and independence initiative not only helps the environment, but will also save money in the long term.

�?Even so, it is important to remember that, as the wars recede, money will be required to reset the Army and Marine Corps, which have borne the brunt of the conflicts.�? And there will continue to be long-term – and inviolable – costs associated with taking care of our troops and their families.�? In other words, I do not foresee any significant increases in top-line�?of the shipbuilding budget beyond current assumptions.�? At the end of the day, we have to ask whether the nation can really afford a Navy that relies on $3 to 6 billion destroyers, $7 billion submarines, and $11 billion carriers.

�?Though I have addressed a number of topics here�?today, I should add that I don’t pretend to have all the answers.�? But, mark my words, the Navy and Marine Corps must be willing to reexamine and question basic assumptions in light of evolving technologies, new threats, and budget realities.�? We simply cannot afford to perpetuate a status quo that heaps more and more expensive technologies onto fewer and fewer platforms – thereby risking a situation where some of our greatest capital expenditures go toward weapons and ships that could potentially become wasting assets.�?

�?A concluding thought.�? The number and kind of ships we have – and how we use them – will be ever changing, as they have for the last 200-plus years.�? What must be unchanging, what must be enduring, is the quality of the sailors and Marines onboard these ships and serving ashore.�? They must have moral as well as physical courage; they must have integrity; they must think creatively and boldly.�? They must have the vision and insight to see that the world and technology are constantly changing and that the Navy and Marine Corps must therefore change with the times – ever flexible and ever adaptable.�? They must be willing to speak hard truths, including to superiors – as did their legendary forebears.�?

�?Over the past three and a half years, in the fury of two wars, I have seen the future of the Navy and the Marine Corps onboard ships, on the ground in Iraq and Afghanistan, at Navy bases and Marine camps, and at the Academy.�? These young men and women fill me with confidence that the future of our sea services is incredibly bright and that our nation will be secure in their hands.

�?Thank you.